UKGC must act responsibly after Credit Card consultation
Frivolity of the Gambling Act 2005 must be curtailed as CC and DC facilities hurt all
In 2018 the Responsible Gambling Strategy Board (RGSB) provided advice to the UK Gambling Commission on reducing harm to gamblers. That advice noted that gambling with borrowed money, including with a credit card, is a well-established risk factor for harmful gambling.
The Gambling Commission stated that people should not gamble with money they do not have, and it seems likely the UKGC will decide to ban the use of credit cards for e-gaming.
It has taken the UKGC more than 14 years to try to return to the previous gambling regulations in the UK that prevented credit gambling in the country, and that saw major casino groups closed down when they infringed such regulations.
“To help with a better understanding of the problem the Commission is seeking information from stakeholders including operators and financial institutions on the topic of credit cards. The consultation will last for twelve weeks. About six percent of gamblers use credit cards to bet on the internet, and eleven percent use wallets. Whether those that use wallets fund them with credit cards or debit cards is not widely known,” writes Warwick Bartlett, Global Betting & Gambling director.
“Gamblers that GBGC has talked to largely use debit cards but some prefer credit cards because it offers a layer of security that debit cards do not. We live in an age of cyber-attacks from hackers and databases where large companies have been hacked, with usernames and passwords stolen. A credit card, with a credit limit, where the consumer can decide the amount of credit required, means that a hacker would be restricted to stealing up to the credit limit, less what has already been spent.
“With a debit card your life savings could disappear.”
What the UKGC must not do is to enable the use of debit card only gambling, as this affects directly the economy of the gambler.
Pre 2005 UK Gambling Act did not allow credit play in casinos but allowed check cashing facilities at casinos in the UK. This was after arrangements between gamblers and their banks, which in some way protected gamblers from irresponsible use of credit and debit cards.
The UK government made gross errors with facilities such as high limit gambling in FOBT’s at high street bookmakers, which saw the ruin of thousands of people who were exposed to such gambling products with indiscriminate use of credit and debit cards.
e-gaming transactions will be more costly for all
The real problem for the e-gaming sector is the attitude that will be taken by the banks if credit cards are to be banned from use in e-gaming transactions. In the UK, all betting transactions carry an identification code (7995) so they are isolated from other consumer purchases. However, this practice is not followed in other countries, where gamblers are exposed to banking products of all sorts.
The major banks in UK, Lloyds, HSBC, RBS, Barclays generally do not open accounts for internet gambling companies. Established operators may have accounts but start-ups and SMEs are not being entertained by the major banks. This has led many to go to banks in the BB credit rating rather than the preferred AA.
With major banks opting out of the internet gambling business opportunities not only are good for BB rating banks, and with some of these facilities coming at very high commission rates, the bottom line will be much reduced for smaller online gambling business with defaulting issues on the card.
“Given the exorbitant fines levied upon the banks these days, they will no doubt weigh the risk but any culpability on the part of the banks to enforce the credit card ban could cause them to block all 7995 payments,” adds Bartlett.
“The fear is that the banks will respond with a blanket ban on all 7995 transactions, including debit cards as well. It is an easier solution than exposing themselves to the risk of having their cards used for e-gaming.”
As gambling is an entertainment option for people, probable excess of access should be attended to by regulators. As we have seen how abuse of credit and debit cards hurt society, the UKGC must ensure that the market economy frivolity of the Gambling Act 2005 must be curtailed and mirror responsible measures that protected society from indiscriminate gambling as did the Gaming Act 1968.
